Brexit Brief: One Last October Surprise?

There is a new deal. Can it pass? If so, are we ready for the next phase of negotiations?

There’s a deal…

The British government and the European Union have agreed to a new Brexit deal after reaching a compromise on the Northern Irish backstop. The proposal would see Northern Ireland formally leave the EU’s customs union (at London’s insistence), but align to EU rules in key sectors (at Dublin’s and Brussels’ insistence to preserve the all-island-of-Ireland economy). This compromise would allow Northern Irish businesses to take advantage of lower tariffs should London strike a more favourable trade deal than Brussels. Provisions relating to a transition period, citizens’ rights and financial settlement remain largely unchanged.

… Is there a way to pass it?

It is never that simple. While a majority of MPs say they would like to vote for a deal, securing a majority (320) will take pleasing competing factions. Johnson starts with 288. The Northern Irish DUP’s 10 MPs need to be satisfied that Northern Ireland could fully align with the UK at some point if unionists voted to do so. (The DUP is not satisfied.) 19 Labour MPs are in favour of a deal but will resist one that weakens labour protections. Some of the 28 Conservative “Spartans”, who rejected the deal three times, demand the UK be able to take back control of these same regulations. At time of writing, some appear to be coming round. And then there are the 21 purged Conservatives. While the “any deal will do” attitude is strong here, there are still reservations about future EU-UK trade, while others are coming around to a referendum (which would lose those Spartans immediately). Squaring this circle proved impossible for Theresa May. Can Johnson, whose relationship with parliament is even worse than his predecessors, pull it off?

Deal/no deal

Brexit Brief could see its days numbered as soon as Saturday 19 October, if an emergency weekend sitting takes place to sign off the deal in principle. If MPs do sign off the deal, the government insists legislation could be enacted in time for the UK to leave the EU on 31 October. However, that is easier said than done. Majorities, as Johnson can surely appreciate, can disappear quickly. This might require a technical extension to the UK’s EU membership, to facilitate parliament’s passage of legislation. If not, the UK must request a three-month extension. This would likely be used to call an election (which remains almost certain under any circumstance).

End of the beginning

Before we allow ourselves to imagine that Brexit might be over, this is merely the end of the beginning of Brexit. This deal only covers the UK’s withdrawal. A future relationship will need to be negotiated. Businesses will have no certainty on the future arrangement, which in theory needs to be concluded an ratified by at least 31 EU national and subnational parliaments before 31 December 2020 – and these negotiations have not even started. Questions over data adequacy arrangements, future tariffs and the extent to which UK and EU firms can continue to provide services in each other’s jurisdictions all remain largely unanswered for the short term. So, if by 31 October we see a deal, by 1 November, companies should be ready to influence the next one.

Join our webinar “Brexit: Where Do We Go From Here?” on 30 October at 3pm GMT/11am EST to explore how industry can shape whatever is to come.

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